F. Rose Mary Carpentry Works vs The State of Madras

Ramakrishnan, J.—The Joint Commercial Tax Officer, Coimbatore IV, assessed Messrs F. Rose Mary Carpentry Works, Coimbatore,

dealers in radio cabinets, for the year 1960-61, on a turnover of Rs. 35,106-15 nP. at 7 per cent. This tax was leviable at 7 per cent, under serial

No. 5 of the First Schedule to the Madras General Sales Tax Act, 1959, which reads :

Wireless reception instruments and apparatus, radios and radio gramophones, electrical valves, accumulators, amplifiers and loud speakers and

spare parts and accessories thereof.

There is however one more provision, namely, that contained in Section 3(3) of the Act, which reads:

(3) Notwithstanding anything contained in Sub-section (1) or Sub-section (2), the tax payable by a dealer in respect of any sale of goods

mentioned in the First Schedule by such dealer to another for use by the latter as component part of any other goods mentioned in that Schedule,

which he intends to manufacture for sale inside the State, shall be at the rate of only one percent, on the turnover relating to such sale:

Provided that the provisions of this Sub-section shall not apply to any sale unless the dealer selling the goods furnishes to the assessing authority in

the prescribed manner a declaration duly filed in and signed by the dealer to whom the goods are sold containing the prescribed particulars in a

prescribed form obtained from the prescribed authority.

Explanation.- For the purposes of this Sub-section, ''component part'' means an article which forms an identifiable constituent of the finished

product and which along with others goes to make up the finished product.

It may be also worthwhile to mention that by Act 44 of 1961, which came into force subsequent to the order of assessment in this case, the

explanation above extracted was added to Sub-section (3) of Section 3.

The view of the Joint Commercial Tax Officer, the assessing authority, was that ""radio cabinet"" was an accessory within the meaning of serial

number 5 in Schedule I aforesaid, but it would not be a component part to attract the benefit of the lower rate of 1 per cent, tax u/s 3(3). He also

held further that when the assessee submitted his return in Form A-l on 1st May, 1961, he did not send with it the required declaration in Form

XVII. But this declaration was submitted by him only on 30th May, 1961, along with another Form A-l return and the assessee claimed relief of

the lower rate of tax u/s 3(3) of the Act. The prayer was not conceded as the declarations were not attached to the original return filed, as required

by the provisions of Rule 22(5) of the Madras General Sales Tax Rules, 1959, and also for the reason that radio cabinets were not component

parts of radios but only accessories thereto. The assessee appealed to the Appellate Assistant Commissioner (Commercial Taxes), Coimbatore,

who reversed the finding of the assessing authority. In the view of the Appellate Assistant Commissioner, radio cabinet forms a component part of

a radio because it is in fact used in the manufacture of a ""finished radio"", which does not undergo change, and is identifiable as such in the finished

product. Therefore, he held that the proviso to Section 3(3) enabling the lower rate of 1 per cent, would apply to the sales in question. So far as

the omission to enclose the declaration in Form XVII along with the return was concerned, the Appellate Assistant Commissioner observed that it

was indisputable that the declarations had been filed along with the second Form A-l return, which, but for the slight amendment of the total

turnover remained the same as the one submitted in the first instance, that the taxable turnover was the same in both the returns and that therefore,

Form XVII declarations filed by the assessee could be accepted as valid under the Act. The turnover was thus assessed by the Appellate Assistant

Commissioner at 1 per cent.

The Board of Revenue suo motu took up the case for revision u/s 34 of the Act. The Board of Revenue was of the view that as the Government

issued a memorandum on 10th November, 1960, which clarified that ""radio cabinet was only an accessory falling under item 5 of Schedule I, what

is an accessory of a radio cannot become a component part for the purpose of the proviso to Section 3(3). The Board of Revenue also held that

even if ""radio cabinet"" be regarded as a ""component part"", the assessee failed to attach the declaration in Form XVII to his return as required by

Rule 22(5) of the Madras General Sales Tax Rules, 1959. There was a failure to comply with the said rule and in the absence of any provision to

condone the omission or delay, the assessee was not eligible to the reduced rate of one per cent. Therefore, the Board of Revenue set aside the

Appellate Assistant Commissioner''s order and restored the order of the Joint Commercial Tax Officer. From this decision of the Board of

Revenue, the assessee has filed the present appeal before us.

Learned counsel appearing for the appellant urged that the Board of Revenue while it confirmed the finding that radio cabinet was an accessory

to a radio falling within serial number 5 of the First Schedule,, however erred in holding that it cannot form a component part of a radio within the

meaning of Section 3(3) of the Act. He refers to the meaning of the term ""component"" given in various well-known dictionaries. Thus, Chambers''

Dictionary defines ""component"" as one of the parts or elements of which anything is made up, or into which it may be resolved. Oxford Dictionary

defines ""component"" as a constituent part or element. There can be very little doubt that a finished radio set (which is the meaning to be given to the

word ""radio"" in the context of serial number 5 of the First Schedule) has an essential component part, the wooden cabinet in which the valves, loud

speaker and other mechanical contrivances of a radio are housed, and if a radio set is opened up it can certainly be resolved into several

component parts which will include the wooden cabinet. It is this wooden cabinet that is manufactured by the assessee and which is the subject-

matter of the dispute. There can, therefore, be no doubt that a radio cabinet is a component part of a radio. It should be pointed out that we are

not now asked to canvass the correctness of the finding of the assessing authority as well as of the Board of Revenue, that a radio cabinet is an

accessory of a radio. It is on the basis that it is such an accessory that the present assessment of 7 per cent, has, been made. But in view of the

meaning to be given to the word ""component"" and the familiar knowledge as to what a radio set is composed of, it is obvious that a radio cabinet is

a component part of a radio. We are, therefore, of the opinion that the view of the Board of Revenue is not correct, and we hold that the assessee

is entitled to the lower rate of assessment u/s 3(3) of the Act.

So far as the second argument about the omission of the assessee to enclose to the Form A-l return, a declaration in Form XVII is concerned,

learned counsel for the appellant refers to the terms of the proviso to Section 3(3), which requires that a declaration should be furnished to the

assessing authority in the prescribed manner containing the prescribed particulars and in a prescribed form obtained from the prescribed authority.

The word ""prescribe"" must refer to the rules issued for the purpose, namely, the Madras General Sales Tax Rules, Rule 22. Rule 22(5) states that

a dealer shall attach to his return of turnover in which that, sale is included, the portion marked ""original"" of the declaration received by him from

the purchasing dealer. In the present case, the dealer submitted a return of turnover in Form A-l on the first day of May [rule 15(1) of the Madras

General Sales Tax Rules]; but it was signed by the assessee''s husband per pro the assessee''s firm. On 24th May, 1961, the assessing officer

issued a notice to the assessee directing that the return in Form A-l should be signed by the proprietor. The notice also mentioned that since radio

cabinet was a component part of a radio, it would be assessed at 7 per cent. Learned counsel for the assessee contends that during the prior years

the radio cabinets were not assessed at the higher rate of 7 per cent and that only when the notice was sent to her on 24th May, 1961, did she

become aware that the assessing authority proposed to assess the turnover in radio cabinets at 7 per cent. Acting on the notice, and on the

direction therein to obtain the signature of the assessee in lieu of the signature of her husband, the assessee made out another return containing

substantially the same particulars as in the earlier return and enclosed thereto a declaration in Form XVII which she had obtained in the meantime.

The contention of the assessee is that the declaration sent in the above circumstances along with the rectified second return, must be deemed as a

valid return with proper enclosures, for the purpose of levy of the lower rate of tax.

Learned counsel for the assessee also referred to a decision of the Kerala High Court in Abraham v. Sales Tax Officer [1964] 15 S.T.C. 110,

which held that the words ""prescribed manner"" in Section 8(4) of the Central Sales Tax Act in regard to the submission of ""C"" Forms under that

Act would not take in the time element. Therefore, if the required ""C"" Forms were produced before the assessing officer before the order of

assessment was made, he had to take those forms into account in passing the assessment order. The Kerala High Court in expressing the above

view differed from a judgment of a Bench of this High Court in Deputy Commissioner (Commercial Taxes), Coimbatore v. Parekutti Hajee Sons

[1962] 13 S.T.C. 680, which also interpreted Section 8(4) of the Central Sales Tax Act and held that the term ""prescribed manner"" would include

also the time element and therefore it was not open to the departmental officers or the Tribunal'' to excuse the delay in the submission of ""C"" Form

return. Rule 5 of the Central Sales Tax Rules framed in the Madras State provided that the dealer should submit a return of his transactions in the

course of inter-State trade or commerce in Form 1 together with the connected declaration form before the 25th of each month. The assessee in

that case did not submit the ""C"" Form return along with the monthly return in Form 1 before the 25th of the succeeding month. He failed to submit

C"" Form returns even along with the last return of the year and not even at the time when the final assessment was made by the Deputy

Commercial Tax Officer. He did not give any explanation for his failure. Therefore, the transactions were assessed at 7 per cent, and the benefit of

the lower rate of assessment was not given to the assessee. The Appellate Assistant Commissioner confirmed the decision of the Deputy

Commercial Tax Officer. When the assessee appealed to the Tribunal, the Tribunal observed that as the ""C"" Forms had been submitted before the

Appellate Assistant Commissioner, he could have accepted them. Thereafter, the Tribunal condoned the delay and directed the turnover to be

assessed at the lower rate. It was in such circumstances that this Court held that when once the failure to furnish the ""C"" Form declarations to the

prescribed authority in the prescribed manner had been established, the necessary result would follow, viz.; that the transactions were taken

outside the scope of Section 8(1) of the Act and it was not open to the Tribunal to excuse the delay in the submission of the ""C"" Form declarations

because no such power to excuse the delay was contemplated by the Actor the Rules. Unless the return was accompanied by the declaration in

the prescribed manner the transaction ceased to fall within the scope of Section 8(1) of the Act. Learned counsel for the assessee pointed out that

the present case can be distinguished from the Bench decision on the ground that this is not a case where the delay in filing the declaration form has

to be excused or condoned. What the Appellate Assistant Commissioner did in the case was to treat the second return filed by the assessee after

the; original return was sent back to him for rectification of a defect in substance as the original return itself. The enclosure to the return thus

submitted after rectification was treated by him as an enclosure to the original return itself. This procedure is one which is adopted in several other

analogous procedures for receiving documents like a plaint in a suit, or memorandum of grounds in an appeal. Such plaints or memos of appeal are

often, returned for rectifying some defect or other, and when they are re-submitted with the defect rectified, the plaint or appeal memo so returned

is treated as taking effect from the date of the original presentation. Any enclosures that accompany the re-presented document are also treated as

valid from the date of the original presentation. In the present case, no doubt, the first return was not sent back to the assessee, but the assessee''s

attention was called to the defects in it, by a notice to her. In effect this served to call the attention of the assessee to the necessity for submitting a

declaration form as an enclosure to her return in the event of her desire to obtain the benefit of Section 3(3) . Thereafter, the assessee complied

with the notice and submitted a return rectifying the defect in the matter of signature, and also supplying the necessary declaration form. The

Appellate Assistant Commissioner points out that except for a slight amendment, the total turnover was the same in both the returns and that the

taxable turnover was the same. He was, therefore, prepared to treat the second return with the declaration as a re-presentation of the original

return itself after rectifying certain defects. We are of the opinion that in the circumstances mentioned above, the present ease can be distinguished

from the one dealt with by the Bench of this Court above cited. In this case there was no occasion to condone any delay as such. The question

was whether the Appellate Assistant Commissioner was in error, in the circumstances of this case, in treating the subsequent return with its

enclosed declaration forms in effect as a re-submission of the original return and therefore having validity from the date of the original return. The

Board of Revenue has not at all adverted to this aspect of the case, but proceeded on the short ground that the assessee had failed to attach the

declaration form to the first return submitted by her.

Our attention has been drawn to a prior decision of a Bench of this Court in State of Madras v. Ibrahim Kunhi [1956] 7 S.T.C. 617 , where the

learned Judge expressed the view that though the assessee had submitted the return beyond the period prescribed by Section 9(1) [which

corresponds to Section 12(1) of the Act of 1959], it was certainly a valid return in the sense that there was no legal bar to its acceptance by the

assessing authority in the exercise of his discretion, though it was filed beyond the period prescribed by rules u/s 9(1). The Bench also observed:

If however the delay in the submission of the return was condoned, either expressly or even impliedly, the assessing authority had the jurisdiction to

accept it as the basis of assessment after verifying the correctness of the return.

To a similar effect is the view of the Andhra High Court in State of Andhra Pradesh v. Pyarelal Malhotra [1962] 13 S.T.C. 946 , where the

learned Judges observed:-

Though the assessee could not claim as of right to have the delay condoned in the submission of the return, it was competent for the taxing

authority to excuse the delay in the exercise of its discretion and make the assessment on the basis of it.

These decisions, which refer to the power of condonation of delay vesting in the assessing authority, have not been taken into consideration in

the decision of this Court in Deputy Commissioner (Commercial Taxes), Coimbatore v. Parekutti Hajee Sons [1962] 13 S.T.C. 680. Further, we

have already pointed out in that case, the question of condonation arose before the Tribunal after the assessee had failed to submit the proper

enclosures to his return both before the assessing authority as well as before the appellate authority; but the question dealt with in the two decisions

mentioned above is a power of condonation available to the assessing authority, though, according to the rules, the assessee cannot as of right insist

upon such a condonation. Such a power, according to the above decisions, can be exercised in its discretion by the assessing authority. In the

present case, the facts are that the return in the proper form was before the assessing authority who refused to treat it as a valid return, but the

appellate authority in its discretion, treated it as a valid one. We have already given reasons which distinguish the present case from that in Deputy

Commissioner (Commercial Taxes), Coimbatore v. Parekutti Hajee Sons [1962] 13 S.T.C. 680, because here we have not so much of a case for

condonation of delay, as a case where a subsequent return was treated as one validly submitted in compliance with a notice calling for rectification

of defects in the first return.

We are of the opinion that the decision of the Board of Revenue, in the above circumstances, cannot be upheld. We allow the appeal, set aside

the order of the Board of Revenue and restore the order of the Appellate Assistant Commissioner. There will be no order as to costs.